Pakistanis not financially prepared for life after retirement: survey

• 44% Pakistani survey respondents admit they are not saving for life after work.
• 92% Pakistanis revise life goals following COVID-19 pandemic.
• Affluent consumers now setting new targets for investment goals.

KARACHI: Not many Pakistanis are financially prepared for their life after retirement, a recent Standard Chartered bank survey found, according to The News.

The bank conducted a survey of consumers across 12 markets, and in Pakistan, it found that 44% of the respondents admitted that currently, they do not save for their retirement.

“Like other markets, in Pakistan pandemic has affected the confidence of the consumers and has also induced a savings gap,” Zaigham Sheriff, GM personal segment at Standard Chartered Bank Pakistan, told The News.

“Till date, the majority of affluent people rely on investment income and cash savings and deposits as the expected sources of income in retirement. In line with the global trend almost half of the people plan to retire before the age of 65,” Sheriff said.

Globally there is growing awareness towards sustainable investing, and individual affluent have factored sustainability into their financial decisions in the last year.

“I believe this is one area where Pakistan can focus as there is increasing evidence that longer-term thinking about the environmental, social and governance risk of investments can help future proof investment portfolios.”

The survey also revealed that 92% of the Pakistanis have revised their life goals following the COVID-19 pandemic. The situation has increased people’s inclination towards a healthier lifestyle and concern over managing their health and wealth.

Affluent consumers are now setting new targets for their investment goals and are more open towards innovative financial products, exploring new strategies and diversifying into asset classes that offer less correlated and complementary sources of returns.

Their top priority now is saving for such unforeseen events and other goals like education and financial support for their children, as they have realised that it's important to build up an emergency savings fund and create a forward-looking financial plan.

“Top priorities of the Pakistanis during the pandemic were to set more money aside for the future, they researched into new financial products, and set new goals for their investment values/performance,” said Sheriff, referring to the top priorities of the Pakistani people during the pandemic when they decided to save and invest.

Local savers and investors have always had to weigh macroeconomic trajectory, policy environment, and market volatility. However, since the start of the pandemic in 2020, this has become even more crucial.

Sheriff said market stakeholders, in the case of Pakistan, experienced strongly contractionary monetary policy — policy rate as high as 13.25% — and extraordinarily supportive policy — policy rate remained at 7.00 percent for 15 months — due to the need of protecting economic stakeholders from long-term scarring due to pandemic.

The foreign exchange market has also had two-way movements in the last few years with periods of both rupee strength and weakness against the dollar.

However, since the start of FY-2022 economic normalisation is underway along with policy rate hikes. The central bank has clearly shifted towards stabilisation from growth in the last fiscal year.

“Economy will continue to face both upside and downside risks but local savers and investors should take some comfort from the guidance provided by policymakers and should remain attentive to evolving domestic and external economic developments in the period ahead,” he added.

The Omnicorn variant of the COVID-19 can pose renewed challenges for savers and investors around the world and in Pakistan.

About 50% of respondents felt that the pandemic had made them less confident about their finances whereas 30% feel that coronavirus made them more confident.

“Either of the categories does realise that there is a need to save continually and diversify. This out of necessity has accelerated the roll out and the need for adopting digital platforms at both the provider and the consumer end respectively; this digital revolution will also help flourish penetration into mutual funds and insurance due to easy and convenient access. Banking and investments on the go are the key to serve them better.”